Captive Insurance Accounting and Section 831(b)

The federal government offers significant tax breaks to captive insurance companies. In fact, captive insurance premium payments up to the amount of 1.2 million dollars in total may not be taxed at all.

The special tax status of captive insurance companies springs from the Internal Revenue Code, Section 831(b). Formulated to encourage the growth of small insurance companies (aside from life insurance companies), Section 831(b) confers a number of tax advantages to captive insurance companies. These advantages have been further clarified by two relatively recent safe harbor revenue rulings— so the exact shape of Section 831(b) is still coming into focus.

Knowledge of these advantages and captive insurance accounting practices can benefit a captive insurance company’s bottom line. To take full advantage of the special breaks afforded by this section, you should look at retaining an accounting service with experience in captive insurance accounting. That just might be us. We specialize in captive insurance accounting and can offer those services at reasonable rates. Contact us today for more information.